UK HS2 Phase 1 schedule ‘at risk’ 29 Jun 2016

The 2026 opening date for Phase 1 of the UK’s High Speed 2 rail project between London and Birmingham is “at risk” according to a report by the Government Audit Office. One possible measure being considered to get the project back on track is a “reduction in programme scope”.

UK High Speed 2 alignment

HS2 Ltd, the delivery arm of the UK Department of Transport, has told the Government that it is only “60% confident” that Phase 1 will be ready to enter service by December 2026 as scheduled. Design, procurement and construction is being funded from public money, although some European Union money has been made available to part-finance early design and planning. Construction procurement has already started (Table 1 and 2) with the first contracts expected to be awarded next year (2017).

The report was written before the UK Referendum decision to pull out of the European Union, but uncertainty exists about the country’s ability to pursue publicly-funded mega-projects now that its credit rating has been reduced and as inflation is set to rise in response to the declining value of sterling on the world currency markets.

The report, entitled Progress with preparations for High Speed 2, says: “HS2 Ltd have made good progress with some major procurements for Phase 1, however a range of indicators suggest that the schedule is under pressure.

“The Department’s view is that [60%] is too low, and it has asked HS2 Ltd to revisit the programme schedule in order to increase confidence in delivery to 80%, without increasing costs. It has asked HS2 Ltd to assess the impact of extending the timetable for opening Phase 1 by up to 12 months.”

The report also says the project is facing cost pressures. “For Phase 1 of the programme the current forecast cost slightly exceeds available funding by £204 million, and there is less contingency to deliver Phase 1 than the Department and HS2 Ltd were aiming for at this stage.”

It is also claimed that the cost/benefit ratio, which was £1.70 for every £1 spent at the time of the 2013 economic case for the line was made, could fall to £1.50/£1 spent should the programme overrun or go over budget. “To help manage costs, the Department has asked HS2 Ltd to explore options for reducing the programme scope in ways that do not have a significant impact on programme benefits,” says the Audit Office report.

Phase 2, between Birmingham and Manchester and Birmingham and Leeds is said to be £7 billion over the £28.3 billion funding level agreed as part of a 2015 spending review, although £9 billion worth of savings have been identified since that review was completed, and £2 billion of these have been agreed.

The report concludes: “HS2 Ltd has struggled to meet the overly ambitious timetable set for it by the Department for building delivery readiness, while also developing the programme. This will add to the challenge of delivering an already ambitious programme over the next few years. The programme is now facing cost and schedule pressures and, in response, the Department and HS2 Ltd are considering the impact of extending the Phase 1 schedule by up to 12 months.

“Unless the Department and HS2 Ltd make forthcoming decisions promptly, with greater realism about timetables and full understanding of the trade-offs between costs, schedule and benefits, including the impact on the wider rail network, value for money will be at risk.”